Rapid eye movement (REM) sleep is a peculiar neural state that occupies 20-25% of nighttime sleep in healthy human adults and seems to play critical roles in a variety of functions spanning from basic physiological mechanisms to complex cognitive processes. REM sleep exhibits a plethora of transient neurophysiological features, such as eye movements, muscle twitches, and changes in autonomic activity, however, despite its heterogeneous nature, it is usually conceptualized as a homogeneous sleep state. We propose here that differentiating and exploring the fine microstructure of REM sleep, especially its phasic and tonic constituents would provide a novel framework to examine the mechanisms and putative functions of REM sleep. In this review, we show that phasic and tonic REM periods are remarkably different neural states with respect to environmental alertness, spontaneous and evoked cortical activity, information processing, and seem to contribute differently to the dysfunctions of REM sleep in several neurological and psychiatric disorders. We highlight that a distinctive view on phasic and tonic REM microstates would facilitate the understanding of the mechanisms and functions of REM sleep in healthy and pathological conditions.